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What is a USDA loan?

A USDA loan, also known as USDA mortgage, is a loan issued
through the USDA Rural Development Guaranteed Housing Loan Program by the U.S.
Department of Agriculture. One of the least-known mortgage programs in the
market, the USDA loan program gives home-buyers with a low to moderate income a
way to own a safe, modest, and sanitary dwelling in rural areas that are
eligible under the program.

How is a USDA mortgage different from other loans?

What sets the USDA loan apart from the other types of
mortgage loans is the fact that it offers zero down payment mortgages with 100%
financing, and comes with highly competitive interest rates.

What are the regions considered as ‘rural areas’ for the purpose of a USDA mortgage?

As these loans include only rural regions, the USDA
takes a highly liberal stance when it comes to declaring locations as ‘rural
areas’; the program includes suburban areas and even suburbs of metropolitan
areas in its zone of lending.

Are there different kinds of USDA loans?

USDA offers not just one, but three different types of loans which are:

1.    Guaranteed loans

2.    Direct loans

3.    Repair Loans & Grants

What are guaranteed loans?

Under the terms of a guaranteed loan, the USDA assists
approved lenders such as financial institutions and state housing agencies in
providing the low-income home-buyers with the necessary funds to purchase a
dwelling by guaranteeing up to 90% of the entire loan amount. This effectively
reduces the risk undertaken by the lender to a huge extent and lowers the costs
associated with the loan in the process. It is a win-win situation for both the
lender as well as the borrower.

For what purposes can the money borrowed under a guaranteed loan be used?

With the funds disbursed through this program, the
borrower can either build, rehabilitate, improve or relocate a dwelling in
eligible areas.

Are there any eligibility criteria that the borrower needs to satisfy?

Similar to guaranteed loans, the applicants must satisfy a set of conditions in order to be qualified for the direct loan. These conditions are
as follows:

  • The applicant should possess an adjusted family income
    that is equal to or below the income limits for the area in which they wish to
    purchase a house.
  • The applicant must indicate his willingness to meet
    the credit obligations on time
  • The applicant should not possess any decent, safe, and
    sanitary housing
  • The applicant should agree to use the home being
    bought as his or her primary residence
  • The applicant should be legally capable of fulfilling
    the obligations associated with the loan
  • The applicant should either be a U.S. citizen or meet
    the requirements for non-citizens
  • The applicant should not have been either suspended or debarred from participation in any federal programs
  • The applicant should not have been able to obtain any alternative source of loan whose terms and conditions can be expected to be met

Are there any criteria that the property being financed under a direct loan is required to meet?

Apart from these criteria, the USDA also specifies certain conditions that the property being financed through these direct loans should
meet –

  • The property must be modest in size (with respect to

    the area)

  • The property should not have any in-ground swimming


  • The property should not be designed or used for income

    producing activities

  • The market value of the property should not exceed the

    loan limits applicable in the area

What about the interest rates on direct loans?

The interest rates for direct loans are fixed and are very competitive; with payment assistance, the rate can be as low as 1%.

What is the payback period associated with a direct loan?

The USDA offers a liberal payback period of 33 years, with an extension of up to 38 years for applicants under the very-low-income bracket.

What are repair loans & grants?

The USDA provides loans not only to prospective home-buyers, but also to existing home-owners who fall under the ’very low income’ bracket to repair, renovate, improve, or modernize their homes. These loans are
also known as the Section 504 Home Repair Program. Under this program, the USDA
also gives out grants to elderly home-owners under the ‘very low income’ bracket so that they can take care of their health and safety by removing any hazards that may exist in their homes.

Who is eligible to receive a repair loan?

To qualify for this program, the applicant must satisfy the following conditions:

  • The applicant must be a home-owner and occupy the house
  • The applicant’s family income should be below 50% of the median income of the area the house is situated in
  • The applicant should not have been able to obtain any alternative, affordable source of loan
  • If the applicant wishes to get a grant from USDA, he or she must be 62 years of age or older, and must not possess the ability to repay a repair loan

What is the disbursement limit for a repair loan or grant?

The USDA has set certain maximum disbursement limits for such loans and grants, which are as follows:

·     The maximum amount of loan available under the repair loan program is $20,000.

·    The maximum amount of grant available is $7,500 in a lifetime.

·     An applicant can combine both a loan and a grant for up to $27,500 in assistance.

In order to receive more than $7,500 as a loan, the applicant must possess full title service to the house. The interest rate for the loan is
extremely low at 1% with a long tenure of up to 20 years.

What are the financing guidelines for a USDA Mortgage?

  • Although there are no set amount of mortgage loan limits on a USDA loan. The loan limit is only determined-based on underwriting approval-by your debt to income (29%/41% ratios). This means that the mortgage payment including principal, interest, insurance and taxes (PITI) cannot exceed 29% of your income or exceed 41% with all other monthly payments combined.  The USDA will allow you to take on a greater debt ratio if your credit score exceeds 660. Other limitations are that the property must be in a specified USDA approved target geographic location, you meet a low income income qualification requirement with a minimum credit score of 640, you can show a dependable 24 month income stream, do not own any other property and you are a US citizen or permanent resident.

What fees are associated with a USDA Mortgage?

A USDA loan transaction requires a 2% upfront fee which can be built into the overall loan.

How This Works.

We’re experienced and knowledgeable professionals who are customer focused. We leverage technology with only one goal in mind:

To quickly and successfully fund your loan at the lowest cost possible.

Fast and Easy Setup

Apply online through our streamlined “quick as a blink” application process called… Blink.

Our system can also securely sync with your bank to quickly and easily access your statements. 

We’re here to help, or if you want – just start on your own and we can help complete your application later.

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We Work For You

We work for you, not the lender.

Because your financial situation is unique, your interest is better served if you’re not captive to a one size fits all mortgage offering. We represent a wide range of lenders so we can deliver to you the best loan at the best price for your particular circumstance.

Our Services

Featured Loans

Below are some of the types of loans available to you through our lender network.

Fannie & Freddie Eligible

Conventional Loans

The classic low cost home funding option. Available in both fixed and adjustable rate plans.

Ginnie Mae Eligible

FHA Loans

The Federal Housing Administration (FHA), is a U.S. government agency that provides financing options that only require a minimum of a 3.5% down payment.  FHA (203H) Disaster Loans however are eligible for 100% Financing.

Luxury Properties

Jumbo Loans

Today, many homes require loans that exceed conforming loan limit amounts. Jumbo loans are a popular way to secure financing that exceed certain limits set by the Federal Housing Finance Agency (FHFA). Unlike conventional mortgages, a jumbo loan is not eligible to be purchased guaranteed or securitized by Fannie Mae or Freddie Mac.

Luxury Properties

Super Jumbo Loans

Many home loans today easily exceed standard Jumbo Loan upper limit amounts and require the financing strength provided by Super Jumbo Loans. 

Government Programs

VA Loans

The United States Veterans Administration (VA) provides up to 100% financing for homes as a benefit to veterans.

Government Programs

USDA Loans

The U.S. Department of Agriculture’s (USDA) Rural Development Guaranteed Housing Loan program offer loans with up to 100% financing at rates below market and reduced mortgage insurance premiums with low credit score requirements.

Elder/Senior Loans

Reverse Loans

A reverse mortgage or Home Equity Conversion Mortgage (HECM) is a type of home loan for older homeowners (62 years or older) that does not require the borrower to make monthly mortgage payments.

Portfolio Programs

Private Equity Loans

Private Equity loans are based on the equity value of the property being put up for collateral and not necessarily on a borrower’s credit rating. This type of mortgage is a very useful for certain types of sophisticated borrowers such as those with multiple investment properties 

Tam Funding.

Tam Funding is a licensed broker under the CA Dept. Real Estate: 02009074. Broker of Record NMLS : 1403204. Corporate NMLS: 1829222. CA Dept. Insurance: OL88065.

Borrower Conditional Approval is issued only when lender underwriting supplies a written clearance to do so. Borrower Conditional Approvals are conditional, not guaranteed and subject to lender review of all borrower information.  The final funding of the loan is dependent upon all borrower conditions being met. Rates indicated are subject to market changes and may only be available to certain qualified borrowers. Tam Funding is an Equal Opportunity Real Estate, Mortgage & Insurance Broker

Equal Housing Lender

National Mortgage Licensing System